The Leanest Start-up in Silicon Valley

This has been a disappointing day in Silicon Valley for Kurt Varner. Y Combinator, the elite accelerator for tech start-ups, gave him the kiss-off with a form e-mail. Poor work by the Ukrainian programmers building his product forced him to perform a transnational termination. Twitter co-founder Evan Williams canceled a meeting. And after Varner himself canceled a meeting with an iPhone app developer whose advice he had sought, the developer tweeted his irritation: “How to be a winner. Nag the crap out of somebody to get coffee with you and cancel at last minute once they agree.”

It is 20 minutes past midnight. At home, Varner has a new wife and a cat that love him. But Varner, 25, isn’t going home. Instead, he swings his tan Honda Civic into the empty parking lane of a deserted, sparsely lit residential street in Palo Alto, California. Varner unfolds a sunshade across his windshield and clambers into the back, where he partly undresses and tugs on a pair of long johns. Then he squirms into a sleeping bag, positioning his skinny, 6-foot frame diagonally to fit into the slightly less than 6 feet between the back of the front seat and the outer edge of the car’s trunk, into which his legs extend. He closes his eyes and lets exhaustion duke it out with the ideas that surge ceaselessly through his brain.

I don’t actually witness anything that happens after the sunshade goes up. I’ve already imposed on this guy’s privacy enough for one day, and anyway, Varner has told me about his routine. My rental–a comparably luxurious Toyota Camry that I plan to sleep in out of solidarity–is parked a few yards away. I stretch out on the back seat, alternately dozing and gazing up through the windows at the lattice of shadowy branches swaying gently overhead. But it is cold; I am twice Varner’s age (don’t do the math); and I paid for a room at the Sheraton. After 90 minutes, I drive away, leaving Varner to his dreams.

Silicon Valley is full of dreamers, among whom living cheaply until fortune smiles is the norm. Entrepreneurs couch surf and share hostel rooms and stack up housemates like planes at O’Hare. In that context, the decision to live out of a car (legal in Palo Alto) while trying to start a business is extreme but not unreasonable. When I first read an account of Varner’s adventure on his blog, I suspected it was a publicity stunt. But if so, it was an uncommonly good one, and even if the guy hoped to exploit his experience, that didn’t mean he wasn’t sincere.

Varner defends his intentions convincingly. “I don’t want people to feel as though I’m doing this for publicity, to get attention from the tech community, because I’m not,” says the bearded, ascetic-looking designer. “All I did was write a blog post and submit a link to Hacker News.” That post, published in March, prompted a cascade of comments, from the laudatory (“Kurt, you’re my hero!”) to the critical (“From how an investor would look at it, this idea reeks of desperation”) to the scabrous (“You are a f–ing tool”). Surprised by the volume and intensity of the response, Varner thanked people politely for their advice and good wishes and ignored the vitriol. But some of the nastier comments made his wife cry.

Varner comes off very much the archetypal entrepreneur. A year before his move to Silicon Valley, he quit his well-paid position as a flight-test engineer at Edwards Air Force Base because, he says, “I wanted to do something I was passionate about.” Working by himself from his Los Angeles home, he spent 10 months designing a video-blogging site that took a few, tentative steps into the marketplace before being elbowed aside by larger players. (The Ukrainians, hired over Elance, built that one, too.) Varner resolved to try again with a different product. But this time, he would do it right, with a technical co-founder, a network of people to refer and advise him, and–ideally–a little seed capital. And he would do it in the right place. “I just had to be here,” he says.

One problem: His wife, Caroline, teaches third grade and could not leave her job until the end of the school year. And paying rent on two apartments was out of the question. In four months, the couple would be free to relocate, but “the word wait should not be in the entrepreneur’s vocabulary,” Varner says. Hungry to start and mentally caffeinated from reading Eric Ries’s new book, The Lean Startup, he scrubbed out the Civic, tinted the windows, packed a duffel bag, and drove north.

Silicon Valley elders, like elders everywhere, love detecting in the next generation those traits of gumption and resourcefulness that aided their own rise to the top. Varner listens, rapt, as Paul Bragiel, a serial entrepreneur and partner in the accelerator i/o ventures, reminisces about his own early days in the Valley. “I came here from Chicago in 2005,” says Bragiel, whose Amish-caliber beard spills from his face onto a bright orange T-shirt. “We had eight people living in three bedrooms. That got tons of press, too.”

Varner’s priority since his arrival a few weeks earlier has been cobbling together a network of advisers, influencers, potential partners, and beer-and-conversation friends to buoy both fortunes and spirits. He is not formally looking for money, although he wouldn’t kick it out of bed for eating crackers. During the first week here, he tweeted for showers, using the quest for personal hygiene as an excuse to meet people. (He now pays $39 a month for membership at a 24 Hour Fitness club, where he showers and brushes his teeth.) On the first night here, he sat in the car, cold e-mailing 19 successful entrepreneurs and eight respected app developers whose expertise and connections he hoped to tap. At the time of my visit, he had met with 30, including Justin Kan (Socialcam, Justin.tv) and Sahil Lavingia (Gumroad, Pinterest).

His product, an app called DailyToaster, started life as an iPhone alarm clock that could be dismissed only from a computer. Varner, a chronic oversleeper, hypothesized that if people were forced to sit down at a desk, they would be less likely to crawl back into bed. Once they were online, information spilling in from various feeds, networks, and accounts would engage their minds, waking them fully. Users would visit the site almost every day to deactivate their alarms, and Varner believed that inherent stickiness would appeal to marketers.

But as he made the rounds, he encountered criticisms: Mobile is replacing personal computers; it’s too niche to attract investors; many people sleep with laptops by their beds. “I hoped people would say to me, ‘That would be awesome. I would definitely use that,’ ” Varner tells Bragiel. “But more often than not, it was, ‘That sounds superannoying.’ ”

The new iteration of DailyToaster still includes an alarm clock. But it is entirely mobile and incorporates a voice greeting that informs users of the date, temperature, traffic conditions, calendar appointments, and number of digital communications received overnight. Naturally, there will be a social layer.

Varner talks about DailyToaster in meeting after meeting as we scurry among offices, cafés, and yogurt shops. Reactions vary wildly–Bragiel, for example, thinks the more ambitious incarnation is still too small to attract funding and recommends Varner sell it for $1.99 a pop and make what he can. The most practical advice Varner gets during my visit comes from Brian Wong, who was two years shy of legal drinking age when he founded Kiip, a company that allows game developers to reward players with real goods. A profanely charismatic dervish of a man, Wong is all over the car thing. (“It means that you’ll f–ing work your ass off and do whatever it takes.”) But he denigrates Varner’s beloved Lean Startup philosophy (“It’s called running your business as a f–ing logical person”) and orders him to stop asking for advice (“You’ve had enough meetings “). Wong urges Varner to make a video illustrating his concept and launch it on Kickstarter. “I will bet you $100 that you’re going to raise $100,000 in the next year from Kickstarter,” he says. “And I will give you that $100 to get started.”

On the street outside Kiip’s San Francisco offices, Varner is grinning. “My first seed capital,” he says.

When I ask Varner about his worst moment, he insists it’s all been good–then concedes he could have lived without the stomach bug that laid him out for a day. He misses his wife profoundly. Every morning, Varner wakes up to one of Caroline’s encouraging texts: his own DailyToaster.

Identifying his best moment is easier. Four days after arriving in Northern California, Varner met Josh Avant, a boyish 24-year-old programmer who was leaving the photo-sharing company Hipster following its acquisition by AOL. Avant lives with two roommates in a townhouse in San Francisco. “I thought Kurt had the right kind of hustle,” he says. “I wanted to help him any way I could.”

Varner’s fondest wish in coming to the Valley was to find a technical co-founder. Over beers, he showed Avant a demo of DailyToaster, and the programmer was intrigued. More important, they hit it off personally. But before committing, they made plans to hunker down for a week and build something: proof of concept for their product and their partnership.

For three hours, I sit on Avant’s couch, listening as the two volley strategies and ideas. As they talk, their ambitions swell, then ebb, then swell once more.

A chief subject of debate is the importance of starting with an idea big enough to raise money. Varner’s expenses are practically nil, although that will change if his wife has trouble finding employment. Avant, who pays $1,500 a month rent, has steeper requirements. But he has money saved and, as he sees it, very little to lose. “I’ve got nothing but a computer and some monitors and a bed,” says Avant, as he types a DailyToaster greeting into an online text-to-speech engine. “Having less means I can take more risk.”

Varner emphatically agrees. “What’s the worst-case scenario?” he says, chuckling. “I fail and can’t afford rent? I have to go live in a car?